The impossibility to compare brokerage fees

TrustyJules

TrustyJules

(warning bit of a rant)

Because people on here spoke of IB having the lowest fees I started to look at comparing them to my current broker here in Europe called Keytrade. My main comparison metric would be the option trading costs as these account for the vast majority of my trading fees which can be consequential so worth looking at.

Roughly Keytrade charges the following:

Euronext 2.95 EURO per option
US Options 2$ per option BUT with a minimum of 19.95$ per trade
Eurex 3 EURO per option BUT with a minimum of 15 EURO and you can't go short on EUREX

For all markets Real time data is free as long as you have 3 transactions per month otherwise its roughly 15 EURO p/m

So with that in mind I started looking at IB and on the face of it they look considerably better:

All markets are 1$/1EURO per option

Then you start to look closer - that amount is excluding the fees of the exchange - they vary but it increases 50c more or less the cost. Already less attractive but still better. Then you see that RT data is never free - the comparison is very hard to make but clearly they charge 15$ or EURO per exchange and IB differentiates more exchanges than my broker does.

Then I clicked on "other fees" and you realise there is a bunch of stuff entering into the comparison that's really hard take into account. IB charges modification and cancellation fees which it will (partially) refund under certain conditions. I cancel and modify orders regularly - the market can move under your feet and as I have many directional positions (not necessarily on FANG stocks) the liquidity is often such that you have to gradually entice a bid or ask to get a reasonable price. Whilst doing so 5 times is a lot and doesnt happen every day it certainly happens frequently enough. So it could have a big effect.

Then there are annual charges, possible pattern day trader limitations if you happen to make a trade and charges for anything and everything.I never considered that you would have to pay 25$ to see your account statements for example or that required tax papers on dividends are charged nor that taking money out of the account or making a bank transfer would be charged. All of that stuff is free with my current broker but how the hell do you know how much of it you use?

My conclusion is that really no comparison of prices is possible. Its the features of the broker and the overall cost you have at the end of the year that are relevant. My brokers features aren't great and as I am trading more frequently the costs do add up. Although I have great returns from Jan to Jan trading costs were 6% of portfolio value and 10% of the the total return Jan 17 to Jan 18. This takes into account everything that I was charged on the 340 individual transactions (note an IC is 4 transactions for my broker etc...) which averages out to 40$ costs per transaction.

Anyone else have similar data to compare how expensive or good value for money brokers really are? Whatever they post on their websites is not comparable.
 
TrustyJules said:
(warning bit of a rant)

Because people on here spoke of IB having the lowest fees I started to look at comparing them to my current broker here in Europe called Keytrade. My main comparison metric would be the option trading costs as these account for the vast majority of my trading fees which can be consequential so worth looking at.

Roughly Keytrade charges the following:

Euronext 2.95 EURO per option
US Options 2$ per option BUT with a minimum of 19.95$ per trade
Eurex 3 EURO per option BUT with a minimum of 15 EURO and you can't go short on EUREX

For all markets Real time data is free as long as you have 3 transactions per month otherwise its roughly 15 EURO p/m

So with that in mind I started looking at IB and on the face of it they look considerably better:

All markets are 1$/1EURO per option

Then you start to look closer - that amount is excluding the fees of the exchange - they vary but it increases 50c more or less the cost. Already less attractive but still better. Then you see that RT data is never free - the comparison is very hard to make but clearly they charge 15$ or EURO per exchange and IB differentiates more exchanges than my broker does.

Then I clicked on "other fees" and you realise there is a bunch of stuff entering into the comparison that's really hard take into account. IB charges modification and cancellation fees which it will (partially) refund under certain conditions. I cancel and modify orders regularly - the market can move under your feet and as I have many directional positions (not necessarily on FANG stocks) the liquidity is often such that you have to gradually entice a bid or ask to get a reasonable price. Whilst doing so 5 times is a lot and doesnt happen every day it certainly happens frequently enough. So it could have a big effect.

Then there are annual charges, possible pattern day trader limitations if you happen to make a trade and charges for anything and everything.I never considered that you would have to pay 25$ to see your account statements for example or that required tax papers on dividends are charged nor that taking money out of the account or making a bank transfer would be charged. All of that stuff is free with my current broker but how the hell do you know how much of it you use?

My conclusion is that really no comparison of prices is possible. Its the features of the broker and the overall cost you have at the end of the year that are relevant. My brokers features aren't great and as I am trading more frequently the costs do add up. Although I have great returns from Jan to Jan trading costs were 6% of portfolio value and 10% of the the total return Jan 17 to Jan 18. This takes into account everything that I was charged on the 340 individual transactions (note an IC is 4 transactions for my broker etc...) which averages out to 40$ costs per transaction.

Anyone else have similar data to compare how expensive or good value for money brokers really are? Whatever they post on their websites is not comparable.
More...

your details are not all correct. the fixed is 1.5 euro including exchange fees. modify/cancel isn't an issue if you trade. day trader - that's a US rule but if you don't have 25K in your account, you probably don't have enough to actively trade options anyway and the statement fee is for requests I think more than 3-4 years back. also, the first wire out each month is free. But it is odd - you are paying $20 per order and wonder why you have to pay $15 for market data and perhaps a wire or other item when you are indeed paying for them dearly.
 
I don't cancel a lot of orders and if I do, my fills almost always exceed the cancel fees so that's a non issue for me.

I'm a retail guy so I don't get any commission break point improvment - I pay standard rates (50 cts per 100 shares and 70 cts per option). My average cost per equity option last year was about 72 cents. Without their free assignment and exercise it would have been modestly higher.

I pay for 3 data feeds @$1.50 per month so that's a whopping $4.50 per month

I think the monthly fee is $10 if you don't generate $30 in commissions per month. Not sure on that one since I haven't paid it since 2006 or so when I was traveling.

I don't pay for account statements (over a year of them are available online) nor is there any charge for tax statements.

And then there's the benefit of being able to scale in and out of positions with no penalty. 5,000 shares is the same commission as 10 trades of 500 shares.

Perhaps the fees are different for European accounts but that's just a guess.

There are a lot of things that I don't like about IB but commissions isn't one of them. I wouldn't recommend IB to anyone other than someone looking for lowest commissions.
 
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